Taxpayers Are On The Hook For $1.25 Million After The State Failed To Provide Water To An Oahu Farmer
The Legislature is poised to pay the settlement along with dozens of others totaling more than $13 million.
The Agribusiness Development Corp. is asking lawmakers to pay $1.25 million to settle a case that an Oahu farming outfit brought against it in 2019, alleging the state agency knowingly made years of false promises.聽
Ohana Best says the ADC’s former executive director, James Nakatani, told it that water would be made available and encouraged the company to invest in infrastructure on 160 acres of former plantation land.
Investments were made but the water never came, so Ohana Best sued the ADC and Nakatani on eight counts of bad business dealings, settling in late November for $1.25 million. Nakatani died in April last year.
The ADC case is one of is asking the Legislature to settle this session, a total of 28 civil claims amounting to over $13.4 million. That could increase over the course of the legislative session if more settlements come in before lawmakers adjourn in early May.
The ADC was set up to revitalize Hawaii鈥檚 agricultural economy, but has been plagued with problems over the years, including , apparent failure to accomplish its purpose, and accusations of land banking.
The Ohana Best farm comprised 160 acres of a total 1,200 that the ADC acquired from Galbraith Estate in late 2012.
Hwa Jun Chung, the principal for Ohana Best, applied for a lease in late 2013.
The ADC instead issued a license to farm the land in early 2014, which gave Ohana Best the right to farm but kept it from having full privileges that come with a lease, according to the suit. That made it difficult to obtain loans and financing, so the business relied on its own financial reserves.
Nakatani told Chung the ADC did not issue leases, which was a falsehood and arbitrary decision, given the ADC has regularly awarded leases, the lawsuit said.
“Nevertheless, Chung did what she could do to try and make things work,” the suit said.
In mid-2014 he hoped the farm would be ready to plant by the end of that year.
Nakatani directed Chung to begin preparing the land and making it workable, as it had laid fallow for years, according to the suit, but the license agreement never materialized.
Chung said those investments were made on the premise that irrigation water would be made available, despite Nakatani knowing he “could not and would not deliver irrigation water” but “kept that critical fact to himself,” the suit said.
Pineapple was grown on the land previously, requiring little water, and the water the farm needed was on land owned by the Office of Hawaii Affairs.
The lawsuit contended that Nakatani knew water for Ohana Best wouldn’t be available because of disagreements between ADC and the OHA over the water.
An alternative source of water might have been Lake Wilson but that was only made possible in 2023, with Gov. Josh Green’s approval of $26 million for the purchase of Wahiawa Dam, Lake Wilson, and its spillways and irrigation ditches.
Ohana Best hired consultants, staff, purchased machinery, began installing a network of pipes, and built a roadway and base yard while keeping the land in a well-prepared state, all in anticipation of water coming through.
If Chung had been told the truth, she would not have gone forward with the work and lost lost hundreds of thousands of dollars in the process, the suit said.
Neither of the plaintiff’s attorneys responded to requests for comment.
ADC and the AG’s office also declined to comment.
“Hawaii Grown” is funded in part by grants from the Stupski Foundation, Ulupono Fund at the Hawaii Community Foundation and the Frost Family Foundation.
